Following a challenging second quarter, McDonald’s executives are working on a plan to recapture consumers with value meal deals. The company’s U.S. President, Joe Erlinger, highlighted the struggles faced by McDonald’s in selling diners on affordability, while also acknowledging the ongoing industry and competitive challenges that are expected to persist throughout the year.
In a memo to the U.S. system, Erlinger emphasized the importance of adopting a long-term mindset to ensure the company’s success. He noted that reversing the current narrative and regaining the company’s position as a leader in value and affordability will require sustained and coordinated efforts.
Despite efforts to drive value offerings, McDonald’s reported results that fell short of analysts’ estimates in the last quarter. Same-store sales saw a decline across all segments, including the key U.S. market where sales fell by 0.7%. Erlinger acknowledged areas where the company has been falling short, such as negative guest counts for four consecutive quarters and decreasing items per transaction impacting check averages.
To address these challenges, McDonald’s plans to extend its $5 value meal promotion beyond the initial four-week window in most U.S. markets. The company credits this offer with driving traffic back to its restaurants, as evidenced by high trial rates among low-income consumers. Executives revealed that nearly all business units, encompassing 93% of McDonald’s restaurants, have voted to extend the promotion past its original end date, with many locations planning to continue through August.
During a call with analysts and investors, executives expressed confidence in the financial position of franchisees in the U.S. to support the value offering. They are currently collaborating with owners to evaluate the profitability of the promotion and working towards implementing future value offerings.
McDonald’s executives are optimistic about their recovery plan to regain consumer trust through value meal promotions. By extending these offerings and collaborating with franchisees, McDonald’s aims to overcome the challenges faced in the second quarter and rebuild momentum for the future.